Straight Talk with Brian Straight • January 26, 2025

Hello, and welcome to this week’s edition of Straight Talk. Inside, we discuss:

• Tariff uncertainty

• The Museum of Procurement arrives in Arizona

• LA fire relief

• Prime Time at ProMat

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Tariffs as leverage

       (Photo: Getty Images)

Trump loves tariffs. He once referred to it as “the most beautiful word” in the English language. Based on the extensive reporting on the subject, it’s clear that Trump loves the idea of tariffs and the power he wields with them. But why? I’ll offer my thoughts on it in a bit, but first, let’s take a look at some recent news on the tariff threats.

• On Dec. 1, Trump threatened BRICS nations with a 100% tariff if they pursued a currency to replace the U.S. Dollar.

• Trump on Monday reiterated his pledge to impose 25% tariffs on Canada and Mexico on Feb. 1.

• He has continued to say a 10% tariff on China is coming (down from the 60% tariff he mentioned on the campaign trail)

• On Tuesday, he mentioned applying tariffs to European Union countries.

During the campaign, Trump floated the idea of tariffs on all imports, regardless of the country of origin. But one thing that didn’t happen was tariffs on Day 1. Or Day 2. Or Day 3. It was assumed he would issue an immediate executive order placing tariffs on China, Mexico, Canada, and more on Day 1. It didn’t happen. Instead, that executive order only authorized an investigation of trade deficits.

“The Secretary of Commerce, in consultation with the Secretary of the Treasury and the United States Trade Representative, shall investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits, and recommend appropriate measures, such as a global supplemental tariff or other policies, to remedy such deficits,” it reads. It requests a report by April 1, 2025. (There are other requirements in the EO, but no mention of immediate tariffs. You can read the full executive order here).

Despite the talk on the campaign trail about bringing manufacturing jobs back to America, Trump’s recent comments about tariffs focus on another reason for tariffs: leverage. Trump has repeatedly mentioned illegal border crossings, fentanyl and the flow of drugs, and crime and cartels as reasons for applying tariffs. On Tuesday, he mentioned trade deficits with the EU as a reason. “The European Union is very, very bad to us. So they’re going to be in for tariffs. It’s the only way ... you’re going to get fairness,” Reuters reported him as saying. In recent days, he’s rarely mentioned jobs as a reason—although that is certainly an underlying potential benefit, and something he mentioned repeatedly on the campaign trail.

What should we do?

Regardless of the reason for tariffs, they can be disruptive to business. The big question for businesses remains whether tariffs will be implemented, and if so, when and how much? Melissa Irmen, director of advocacy and strategic relations for the National Association of Foreign-Trade Zones, wrote a good summary of steps companies can take depending on how the trade landscape settles. You can read that here. “Post-election transitions always bring uncertainty, especially around potential shifts in Washington’s trade policies. And that seems to be even more true this year, with tariffs being a major plank in the winning party’s platform,” she wrote. “In the meantime, there’s daily news about a possible trade action that the new administration will take—or is considering. Keeping up with the latest news and speculation is difficult, but staying compliant in an ever-changing trade environment can be time-consuming and costly.”

Typically, the approach to supply chain disruptions is to diversify your supplier base and supplier countries. We learned the lesson of diversification the hard way during Covid. But, when tariffs are being used as leverage for other (political) purposes, it creates an uncertainty that makes diversification difficult. Leave China because of a 60% tariff that will make the product price uncompetitive. That’s an easy decision to make. But which country do you go to? That country might be facing a tariff threat next. And it may not be a country we see coming.

A great example of that is Mexico. Following passage of the USMCA agreement and the Covid pandemic experience, companies began moving manufacturing to Mexico. Billions in investment dollars have flowed into the country for new facilities, to line up new partners, and to set up new supply chains. Now, a 25% tariff might be immediate if Mexico doesn’t play ball with Trump’s border policies. The same goes for Canada.

Consistency is important for any business. Consistency in regulations. Consistency in laws. Consistency in trade deals. Regardless of the policy, a business can adjust its approach—it may not like the approach required, but it can adjust. When there is no consistency, creating a long-term plan is difficult. What will the business climate look like in 2030? How about 2026? Now, at least in terms of potential tariffs, that timeframe is even shorter. Better get those six-month business plans dusted off, because you may need them.

It’s a new world in 2025, and the supply chain manager’s job has just gotten much more difficult.

The Museum of Procurement

       (Photo: Arkestro)

We have museums for everything else, so why not a Museum of Procurement? AI procurement technology company Arkestro opened the Museum of Procurement on Friday at Arizona State University. The traveling exhibit is designed to showcase the past, present and future of procurement. It will be on display for the next year at ASU’s W.P. Carey School of Business. Tours and events will be held throughout the year, Arkestro said. On a webpage promoting the museum, Arkestro notes that “civilization is about moving stuff into the right place at the right time.” Museum visitors will be able to see early transaction records, contracts, counting boards, an Abacus and much more. The museum was most recently at Rutgers University. You can find more on the museum’s website here.

LA fire relief

“While many news stories suggest that donations of food, water, clothing, and other commodities are urgently needed, the reality on the ground is considerably different,” she wrote. “Over the past two weeks, there has been a huge display of generosity from members of the local and regional community, as well as national organizations. Vast amounts of product donations have poured in, and as a result, most of the area’s disaster distribution centers aren’t just adequately stocked, they’re overstocked—and overwhelmed.” Fulton noted there are 194 disaster distribution centers set up in the region, and ALAN is providing support to those facilities. Read Fulton’s full message here, and remember that in times of disasters, help is needed, but it’s important to understand what form that help needs to take to best support the affected people and region.

What I read this week

Are you familiar with the International Emergency Economic Powers Act? That is one of the trade-related items that could impact businesses in 2025. … Mobile robot growth has slowed, but new analysis continues to paint a bullish picture for the sector. … What is the future of AI? Here are seven tech trends to watch this year. … NFL Hall of Famer and current University of Colorado football coach Deion Sanders will be a headline speaker at this year’s ProMat conference. … The national average diesel fuel price jumped last week, rising 11.3 cents per gallon to reach $3.75 per gallon. … President Donald Trump has named Patrick Fuchs to serve as chairman of the Surface Transportation Board. … The latest TD Cowen-AFS Freight Index shows modest optimism for truckload and parcel pricing increases.